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The AAT has held that the taxpayer company, as trustee of the Slade Bloodstock Unit Trust, was not liable to FBT on a number of benefits (in the form of car benefits, household expenses, meal, entertainment and other private expenses) provided to its sole director and secretary (Robert) and his wife (Corinna). The AAT accepted that the benefits were in repayment of a loan owed by the taxpayer company to Robert and Corinna. The AAT said, at para 49:

"The Tribunal...has difficulty accepting that, in this instance, the payments made by the applicant to Robert and Corinna could be classified as being made "in respect of" their employment. While there is a superficial attraction in concluding that the payments were necessarily an incident of employment, particularly when viewed in the context of section 148(1) of the FBT Act, the Tribunal does not accept that this was in fact the case. The payments were at all times regarded by Robert and Corinna, and therefore the applicant, as nothing more than a loan repayment. They would have been entitled to such repayments regardless of the existence of the employment relationship, and they would have activated the repayments regardless of the existence of the employment relationship. The benefits were not connected with the employment of Robert and Corinna but rather they were related to the ultimate beneficial ownership held in the units of the unit trust. There was no material relationship between the employment of Robert and Corinna and the provision of the benefits - indeed, there was no relationship."

The Commissioner's FBT assessments were set aside: Slade Bloodstock Pty Ltd and FCT [2006] AATA 666 (AAT, Hughes M, 31 July 2006).

For a copy of the decision, go here

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